Violence Between Israel and Hamas Continues; Congress Not Yet Passed Legislation to Deal with Immigration Crisis of Central American Children; New Documents Indicate General Motors Hid Knowledge of Car Defects; Former Yahoo! Employee Sues for Sexual Harassment; California's Death Penalty Ruled Unconstitutional; Russia Reacting to New, Tougher Sanctions from the U.S.; Passengers of The Escaped Back on Land; Hamas Violates Cease Fire

Aired July 17, 2014 - 07:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

KATE BOLDUAN, CNN ANCHOR: I wanted to find out from you. You have been speaking with Israeli officials. What do they think happened? Why did that airstrike happen that killed the four Palestinian boys in Gaza? Do they know why that happened?

WOLF BLITZER, CNN HOST, "THE SITUATION ROOM": The chief spokesman for the IDF says it seems to be a terrible, terrible blunder on the part of the Israeli military. They say what they are going after what they called terrorist targets, but these four little boys were killed. They were playing football or soccer on the beach. It's an awful situation. The Israelis have launched their own internal investigation. A spokesman for the prime minister told me that a general has now been put in charge.

They also say, the Israelis, if the Palestinians, if the Hamas militants had accepted the day before that ceasefire those boys would still be alive today, but they didn't. The Israelis did. And now there's a temporary ceasefire.

Let's hope that could hold. The Israelis also make that point they are doing their best, they're not perfect, to try to avoid civilian casualties. I went to an Israeli air force base to talk to some drone pilots and F-15 pilots.

(BEGIN VIDEOTAPE)

BLITZER: This is what an Israeli drone sees over Gaza. CNN got special access to this highly secure Israeli air force base, home to the Israeli drone program. I spoke with Lieutenant Orr whose face and last name we're not allowed to show. His job, to make sure targets are clear of civilians.

How do you do that?

UNIDENTIFIED MALE: We see the picture live before we attack the target. We are flying through the target, searching for civilians and searching for any casualty that can be around the target.

BLITZER: So before Israeli jet fighters, F-16 or any other Israeli plane, actually goes out there and launches missiles, you have to clear it, is that right?

UNIDENTIFIED MALE: That's right.

BLITZER: The Israel Defense Forces gave this video to CNN which they say shows they take every effort to spare civilian lives. As this target is about to be struck, it's called off at the last minute.

UNIDENTIFIED MALE: We reached the target, and as we're getting closer we saw people walking around the main street. We immediately stopped the attack.

BLITZER: His message to relayed to the Lieutenant Ohmert of the Israeli Air Force whose F-15 was ready to strike.

UNIDENTIFIED MALE: Five seconds before we released the bombs, we saw someone, and the communications said cancel the bomb, cancel the bombing.

BLITZER: Still, Palestinians are dying, and the death toll is now over 200. The Israeli military says it has targeted over 1,800 sites in Gaza from which they believe Hamas is operating.

It's not a perfect business though, as you know, because a lot of Palestinian civilians have been killed.

UNIDENTIFIED MALE: As I said, every death of any civilian from every side, it's tragedy.

BLITZER: When there are mistakes do you feel guilt?

UNIDENTIFIED MALE: Sometimes there are mistakes, and, yes, I take it personally.

(END VIDEOTAPE)

BLITZER: And clearly there was a major mistake that occurred when those four little boys were killed on that beach in Gaza City. Earlier this morning the Israelis released some dramatic new video. I'll show it to you quickly, Kate. It shows what the isolation say 13 Hamas militants crawling out of a tunnel that was built from inside Gaza. Actually that tunnel opening inside Israel near kibbutz Sufa not far away. The Israelis spotted these guys coming out of the tunnel. They went out there. And as you can see they fired at these 13 Palestinian -- these Hamas infiltrators, as they call them, and all of them were killed, and they are trying to go after those tunnels. There are others as well. So that video just released about an hour or so ago by the IDF, the Israel Defense Forces.

Let's hope that ceasefire holds and the negotiations, the diplomatic negotiations can end this current round of violence because it's awful, I must say, on both side.

BOLDUAN: Absolutely right, Wolf. We'll see. It's happening as we speak on the ground right there. Wolf, thank you so much. You can of course see Wolf. He's going to be reporting there on the ground in Israel 1:00 p.m. eastern and, of course, for "THE SITUATION ROOM" 5:00 p.m. eastern right here on CNN.

CHRIS CUOMO, CNN ANCHOR: So here's a question for you. If you were in Congress would you go on vacation while thousands of kids were stuck in not great conditions to say the least on the border? In two weeks Congress is planning on doing just that. And I say that because lawmakers are doing what they are doing best. They are obstructing. They are lining up to oppose the president's $4 billion proposal to deal with the issue, and that's OK. But they are not really proposing anything better themselves. Instead, they are continuing to make these kids pawns.

Now more and more states are lining up to say not in my backyard, we don't want them. So what's going to happen? Let's go to CNN's Michelle Kosinski at the White House with more. Is there any chance for hope that there will be something done at least to help the kids?

MICHELLE KOSINSKI, CNN CORRESPONDENT: Hey, Chris. Yes, there is work being done, but, you know, this crisis as many now have called said it has been going on for months. There's been a lot of talking this week but something needs to be done. We're what, nine working days away from Congress taking off for August. And as you mentioned, even some Democratic governors are saying no to temporarily housing these people who are here on their own.

(BEGIN VIDEOTAPE)

KOSINSKI: Congress is now down to days, all that's left of summer to approve funding, change the process to deal with the thousands of families, children that have stirred this nation's emotions.

UNIDENTIFIED FEMALE: We have children, too!

KOSINSKI: Last night the president met with the Congressional Hispanic Caucus, many though not all of whom fiercely oppose changing the law that gives all Central American kids a chance to plead their cases for asylum here.

REP. LUIS GUTIERREZ, (D) ILLINOIS: It was a very emotional meeting. The pain that we feel about children at the border and the pain that we feel given that 1,000 people will be deported today and 2 million have been deported, that pain that our community is going, that destructive nature of our broken immigration system.

KOSINSKI: The White House also briefed the Senate behind closed doors last night asking for nearly $4 billion and a change in the law with very mixed reactions.

SEN. JOHN MCCAIN, (R) ARIZONA: Nothing is going to improve until the planeloads of children return to the country that they left.

SEN. LINDSEY GRAHAM, (R) SOUTH CAROLINA: The average cost of dealing with an unaccompanied minor was $250 to $1,000 a day. That is unbelievable.

KOSINSKI: Many Republicans want to change that Bush era anti- trafficking law that gives kids from countries not bordering the U.S. a legal shot at asylum that most kids from, say, Mexico don't get, even though many will be sent home anyway, a law that many of these same lawmakers voted for at the time, not knowing this surge of unaccompanied minors would start around 2012, the same year President Obama allowed many immigrants brought here as children to stay.

The legal process now can take years. Temporary housing is needed around the country, but several states, even some Democrats running those states, are saying no to the White House, insisting it's the federal government's burden.

GOV. DANIEL MALLOY, (D) CONNECTICUT: The Congress of the United States should appropriate $3.7 billion which the president has asked for.

(END VIDEOTAPE)

KOSINSKI: And it seemed pretty clear last night that the Senate is not ready to approve the president's plan, but there are these other bills percolating up. There's a bipartisan one, one in the Senate, a Republican one in the House, a lot of work going on, but no voting yet. This is a tough issue that at this point even the Pope has weighed in on. He says there needs to be a change in attitude away from defensiveness and fear and that these children should be welcomed and protected. Chris?

CUOMO: You don't need to be the Pope to know that these kids deserve better than they are getting right now, whether they stay or whether they get sent back home. Michelle, thank you very much.

Another story for you. General motors CEO Mary Barra is back in front of Congress this morning for the fourth time. OK, why? Because this issue of why the company delayed recalling millions of cars with faulty ignition switches just continues to get worse. Why? The "New York Times" investigation has uncovered new evidence of the lengths that GM apparently went to cover up the problem.

Let's get some perspective from someone who understands this very well, Joan Claybrook, safety activist and former head of the National Highway Traffic Safety Administration. Miss Claybrook, thanks very much for joining us, as always.

JOAN CLAYBROOK, FORMER ADMINISTRATOR, NHTSA: My pleasure.

CUOMO: What do you make of these new documents uncovered by the "New York Times" that show, allegedly, that GM not only kept silent on fatal crashes but in some cases appeared to purposefully omit key information?

CLAYBROOK: Well, it's outrageous. This is a huge corporation that has responsibility to millions of people across the country with the vehicles that they sell. They are supposed to inform the national highway traffic safety administration accurately of the information they knew about a safety defect. They misled the agency. They covered it up. And this company deserves criminal penalties for this misbehavior. CUOMO: GM keeps saying that was the old GM. We are the new GM. We

are being open and honest, but, Miss Claybrook, aren't these the same people who were involved then, just some are in different positions now?

CLAYBROOK: Many of them are the same, and the general counsel of General Motors, Mr. Milligan, who is going to appear before Congress today, is going to be targeted particularly because the lawyers handled lawsuits filed against the company that alleged that they had this problem existed with the ignition switches, and so they knew a lot of information that they never revealed to the Department of Transportation, the National Highway Traffic Safety Administration. So they are going to be target. Lawyers are supposed to tell the truth. If no one else is, lawyers definitely are supposed to be. They are officers of the court. So I think that that's a key issue that will come up today.

CUOMO: I want to talk to you about NHTSA's role in this in one second because obviously you understand that very well as the former head. But just looking at this, this seems to play to an often held prejudice against big companies, which is this. You knew that your product was bad. I made a calculation about what it would cost you, and when you decided it would cost too much you hid it and hoped for the best. Is that's what's going on here?

CLAYBROOK: I believe it is. Many companies don't tell the Department of Transportation everything, and they do get away with it. And I think General Motors thought it would get away with it, but in this particular case the information came out, and a new CEO came in and decided to recall these old cars. And so then people started looking at more detail and discovered lots of very outrageous misbehavior by General Motors and reckless endangerment of the American public.

CUOMO: What is the chance that Mary Barra had no information, no knowledge of this ever, given how high her positions were in the company?

CLAYBROOK: Well, I don't -- she says she did not know about this defect and you can't really challenge that.

CUOMO: Why can't we challenge it, Miss Claybrook? Everybody seemed to know. It was an open secret. It was a question of how much. That's what these documents show. These weren't secret documents. Why give her a pass?

CLAYBROOK: Well, I'm not giving her a pass. I'm just saying that she's the CEO of the company and she says she didn't know. A lot of people that she was associated with apparently did know, but we have no way of documenting that unless there's a lawsuit that can, you know, extract that kind of information. I think the more important issue at this point is to look at what should be done. You mentioned the Department of Transportation.

CUOMO: Yes.

CLAYBROOK: There needs to be legislation. There needs to be legislation that keeps the NHTSA, the regulator, from keeping information secret. It's been one of the most secretive agencies in recent years, and that's wrong. This is a consumer protection agency, and the public should have access to this information. And if the public had had access to this information that NHTSA knew, then I think that the outcome could have been different. There were two times recommendations made by engineers at NHTSA in 2007 and 2010 to do a reinvestigation, and they were turned down internally by their superiors.

CUOMO: But I don't get this. You were the former administrator. I'm not accusing you of anything, but you ran the place, and how could they be keeping information from the public when that's their job is to expose the information to the public? And how is that something that can't be fixed?

CLAYBROOK: Well, it can be fixed and it needs to be fixed. The agency, you know, by delaying, by not answering, by putting off Freedom of Information Act requests and so on are, making it more complicated and having a web page that doesn't work well, they make it so difficult to get the information that people don't --

CUOMO: Are they in cahoots? Is NHTSA in cahoots with these companies? Do you have all these employees going from the administration into the car companies and back again so that you have some incentive to be nice to these companies?

CLAYBROOK: Actually there's a grain of truth in that because when you finish your career at the Department of Transportation, some people want to keep on working and quite a number of people from NHTSA have gone to work for law firms or other companies or actually to the auto companies. So, yes, there is that incentive.

But I don't think that that's necessarily what's played out here. I think that this agency doesn't like to be criticized so it just makes it very difficult to get information. And so what we would like is legislation that requires this kind of information to be made public, that increases the penalties. Right now the maximum civil penalty for general motors is $35 million. It should be $300 million or more.

CUOMO: Money is never enough. You have to have the fear that you're going to do time.

CLAYBROOK: And criminal penalties are absolutely essential. There are criminal penalties under the Justice Department for lying to the government.

CUOMO: Right.

CLAYBROOK: But for not communicating what they knew, there are no penalties and there should be. And in addition, NHTSA's budget needs to be increased. It's $140 million for the entire government program for auto safety in the entire U.S., so it's much too little, so the agency doesn't have the resources to do a good job either.

CUOMO: Understood, and important to note that you work with Public Citizen. You don't work for a car company. You're out there advocating for people. I didn't want to throw you in with the bad guys. Thank you very much, Miss Claybrook, appreciate the perspective.

CLAYBROOK: OK, thank you.

CUOMO: A lot of news to start your new day today. Let's get John Berman.

JOHN BERMAN, CNN ANCHOR: Thanks so much, Chris. There is still hope for a deal on eliminating Iran's nuclear program even with a deadline looming and no agreement in sight. Reports say Iran and six world powers are prepared to extend talks past the July 20 deadline. This after two days of meetings this week with Tehran's negotiator. Secretary of State John Kerry says significant gaps do remain.

Breaking overnight, Ukraine says Russia shot down one of its jets. Kiev says a Russian military plane launched a missile strike. The pilot ejected and was picked up safely.

Meantime, Russia is reacting to new, tougher sanctions from the United States. Russia's foreign minister warning their response will be painful. The new round of sanctions targets Russian banks, energy companies and the defense industry.

California's death penalty has been ruled unconstitutional by a federal judge. The ruling interprets the executions as cruel and unusual punishment because of long delays and uncertainty.

The judge cited the more than 900 people who have been sentenced to die in California since 1978. Only 13 of them have been executed.

(BEGIN VIDEOCLIP)

BERMAN (voice-over): Passengers are finally back on dry land after some 16 hours stranded on a casino boat. The Escapade was on its maiden voyage when it ran aground about two miles off the Georgia coast. The coast guard used smaller boats to ferry most of the passengers to shore. A few were hoisted out by helicopter. The Escapade's crew says the navigation malfunction led them into shallow water. Yikes.

(END VIDEOCLIP)

CUOMO: I've had a couple of those.

BERMAN: I bet.

That's a life metaphor.

CUOMMO: That boat was high and dry by the way.

BERMAN: Also a life metaphor, not lucky on a casino cruise.

BOLDUAN: Any more life metaphors you can offer for us right now?

BERMAN:: The weather today is a metaphor for life. For that we go to Indra Petersons.

INDRA PETERSONS, CNN METEOROLOGIST: At least I actually have good news since that's what we're going to refer it to. What are we talking about is finally in the northeast. That cold front has kicked out of here. That low is making its way off into the northeast but look what is left. All that cool air diving in and really going all the way down, even into the southeast. So some record lows are out this morning. In fact, Atlanta already broke its record for a morning low of 61 degrees. Look at all the 50s. So comfortable this morning in the midwest. Some people saying it's chilly but I don't think 50 is quite chilly. By the way, you're starting off mild so, of course, you'll end off a little bit on the cool side as well. Temperatures really kind of mild in the midwest and the northeast for the next couple of days. We're going to enjoy this. The big thing to takeaway it's dry. That cold front is out of here and we speak of dry. The humidity, it is dropped so it actually feels comfortable. D.C. only seeing a 39 percent, instead of those 60 percent and 70 percent humidities we were looking at. We're kind of trading places. The northeast starting to dry out but that is not the case into the southern plains. Take a look at the amount of rain that is expected. This low is going to pull all this moisture in out of the Gulf, so we're talking about 5 to even 7 or 8 inches of rain possible. That's going to be a huge concern through portions like Texas and Louisiana. If anyone is flying today, also worried about Dallas-Fort Worth, a lot of delays with severe weather. So we're just kind of trading good here, bad there.

BOLDUAN: That's exactly right. Thanks, Indra. Thanks so much.

CUOMO: Did you hear Indra say that 50s she doesn't consider cold? Do you think she would have ever would have said that a year ago when she joined us here?

(CROSSTALK)

CUOMO: She's changed.

BOLDUAN: A metaphor on life, I'm looking for a metaphor on life.

PETERSONS: And none for the better, John.

BERMAN: For the better.

PETERSONS: Thank you.

BOLDUAN: Coming up next on new day, a bitter legal drama unfolding at Yahoo!.

(BEGIN VIDEOCLIP)

BOLDUAN (voice-over): A high ranking executive is now fighting back after a former employee alleges sexual harassment. We're going to break down what both of these sides are saying.

CUOMO(voice-over): And life or death drama captured on camera. This is a police officer responding to a drowning. He has a body cam on and captures everything. We'll show you what happened.

(COMMERCIAL BREAK)

BOLDUAN (on camera): New accusations this morning involving a high ranking Yahoo! executive.

(BEGIN VIDEOCLIP)

BOLDUAN (voice-over)A former employee has filed a lawsuit accusing her female boss of sexual harassment. Nan Shi says her former boss forced her to have sex and then threatened to fire her if she refused. Well, now that executive is also fighting back and suing her right back. CNN's Laurie Segall is here with much more on this. What is going on?

(END VIDEOCLIP)

LAURIE SEGALL, CNN CORRESPONDENT: Its a pretty unique case. I mean, this is a woman accusing another woman of sexual harassment at a major tech company. And these are some pretty serious allegations. Now, I spoke to Nan Shi exclusively and she talked to me. She's at the heart of the story. She spoke to me about some of the details behind the sexual harassment. Take a listen.

(BEGIN VIDETAPE)

NAN SHI: And I told her, "Hey, look, we are friends and you are my manager. We shouldn't be doing this.

SEGALL: That's what a former Yahoo! engineer says she told her boss, Maria Zhang, when she allegedly came on to her.

SHI: And then she hug me all over and then she took my hands, you know, and put it under her. I just felt like, you know, I was being forced. Then we did oral sex.

SEGALL (voice-over): Nan Shi, a former Microsoft engineer, left the company to work with Zhang's startup which was eventually acquired by Yahoo!. The company transferred the women to Yahoo!'s headquarters where, according to Shi, Zhang requested to stay in her apartment. She's suing Yahoo! and Zhang for wrongful termination and sexual harassment. Yahoo! has adamantly defended Zhang, saying that they would fight vigorously to clear her name. And now, Zhang is fighting back too, filing a defamation suit against her accuser.

SEGALL (on camera): Did you tell her it made you uncomfortable?

SHI: No, I just told her that I didn't want to do it.

SEGALL (voice-over): According to Nan Shi, Zhang joked that her future hung in the balance.

SHI: She said, "Well, if we don't have this, you may not get your stocks, and, you know, you may not even stay at Yahoo!"

SEGALL: In the suit just filed against Nan Shi, Zhang adamantly denies ever having a sexual relationship with her, claiming the engineer is looking for financial gain and that she simply wasn't making the grade. Nan Shi tells us another story, claiming after she cut off the sexual advances her work was affected. Nan says she was removed from projects and separated from her teammates.

SHI: The help I wanted is please, please, move me to another team. I don't feel safe.

SEGALL: As a result, Nan Shi says Yahoo! asked her to stay home while they conducted the investigation.

SHI: That was the hardest time I went through, you know. I -- after months I finally went to my family doctor. I told her, you know, I have depression.

SEGALL: Zhang also says her reputation has been damaged. Nan Shi herself claims both emotional and financial damages as questions linger.

SHI: I just sit here and keep asking myself why me?

(END VIDEOTAPE)

SEGALL (on camera): Its an interesting case. Obviously, you know, she's very upset and very emotional during this interview but you have to look at the other side, which is Maria Zhang saying that these allegations are completely false, they are inhumane. So this case is obviously ongoing.

BOLDUAN: Clearly someone isn't telling the truth because they have completely conflicting accounts of what happened.

SEGALL: Completely conflicting.

BOLDUAN: Thanks so much, Laurie.

SEGALL: Thank you.

Coming up on new day, here's a shock, Chris Christie speaking his mind.

(BEGIN VIDEOCLIP)

CUOCO (voice-over): He says asking if he's running for president is obnoxious and anyone who is already running should be very cautious of that. Guess what he's doing? Heading to Iowa. Why is he headed there? Find out on "INSIDE POLITICS"

BOLDUAN (voice-over): Great state, especially in the summer.

And niacin may not be so nice after all. New research calling the popular ch- what? CUOCO: You need niacin.

BOLDUAN: Cholesterol drug risky. Dr. Sanjay Gupta is here to tell us and to help me out with whatever is wrong with me.

CUOCO: Not being able to pronounce it is one of the main signs of cholesterol.

(COMMERCIAL BREAK)

CUOCO: Welcome back to the show. There is a lot of news to start your new day so let's get you to John Berman in for Michaela.

BERMAN: Thanks so much, Chris. Breaking this morning Israel reporting the first violation of what was supposed to be a five hour humanitarian truce. Hamas firing at least three mortars from Gaza into Southern Israel about two hours into the cease-fire. There has been no immediate response from Israel.